Oilseed groups concerned with EU energy directives

From the American Soybean Association

Thu, 2011-03-10 07:26

Could lose large soybean market

• Trade reports indicate that, since the RED was implemented by Germany on Jan. 1, 2011, U.S. soybean exports to that country have declined significantly, and soybean oil processed in the EU from U.S. soybeans is being re-exported out of the EU.

The American Soybean Association (ASA), joined by other U.S. oilseed producer and industry organizations, has expressed serious concerns to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack and U.S. Trade Representative (USTR) Ron Kirk about the requirements of the European Union’s (EU) Renewable Energy Directive (RED), and with the impact the RED is having on access for U.S. agricultural products to EU markets.

In a letter delivered to Secretary Vilsack and Ambassador Kirk March 9, the group is requesting a meeting with USDA and USTR to consider options for responding to trade barriers resulting from and influenced by the RED. The letter asks USDA and USTR to place an immediate priority on seeking to initiate bilateral negotiations between governments.

Further, the group asks USDA and USTR to communicate with third country governments regarding the implications of and needed response to the RED. ASA believes a highly coordinated effort is needed to identify and respond to the immediate, as well as longer-term, market threats resulting from RED implementation.

“Trade reports indicate that, since the RED was implemented by Germany on Jan. 1, 2011, U.S. soybean exports to that country have declined significantly, and soybean oil processed in the EU from U.S. soybeans is being re-exported out of the EU,” said ASA First Vice-President Steve Wellman, a soybean producer from Syracuse, Neb. “As other Member States transpose the RED into national law, ASA anticipates the economic viability of exporting U.S. soybeans to the EU will be further eroded, and that a $1 billion market could be lost.”

In order for biofuels to qualify for EU tax credits and use mandates, the RED requires that biofuel feedstocks must reduce greenhouse gas emissions by a minimum of 35 percent by 2013, and by 50 percent by 2017, compared to petroleum diesel. Based on Brazilian production and transportation data, the EU set the greenhouse gas savings default value for soy biodiesel at 31 percent, short of the 35 percent reduction required. This disqualifies soy as a feedstock for biodiesel.

EU-grown rapeseed passed

EU-grown rapeseed however passed with a 38 percent value. Since virtually all of the soybean oil processed from U.S. soybeans in the EU is used in biodiesel production, disqualification jeopardizes $1 billion in annual sales of soybeans to EU markets.

A study funded by the United Soybean Board (USB) used actual U.S. production and transportation data to show that U.S. soy biodiesel reduces greenhouse gas emission by up to 52 percent. This study has been shared with USDA, USTR and the U.S. Environmental Protection Agency, and has been submitted to the EU’s Joint Research Centre for their consideration and approval.

“The RED also requires a ‘proof of sustainability’ certification that biofuel feedstocks were produced on farms that have not been converted from high carbon density lands, such as rain forests,” Wellman added. “This approach does not provide for acceptance of the existing U.S. approach to conservation and environmental sustainability that may well be of higher value than the RED requirements in attaining its objectives.”

“ASA is also concerned by the possibility that, unless a workable approach to the RED is found, it will establish a precedent for other countries imposing environmental and sustainability requirements on U.S. agriculture,” Wellman stated. “Germany’s current implementation of this Directive represents a process mandate for systems of production and marketing that act as undue and unjustified trade barriers to imports of U.S. products.”

ASA represents all U.S. soybean farmers on domestic and international issues of importance to the soybean industry. ASA’s advocacy efforts are made possible through the voluntary membership in ASA by over 21,000 farmers in 31 states where soybeans are grown.